The Beauty Health Company (NASDAQ:SKIN) shareholders might understandably be very concerned that the share price has dropped 43% in the last quarter. But that doesn’t change the reality that over twelve months the stock has done really well. In that time we’ve seen the stock easily surpass the market return, with a gain of 38%.
Since the long term performance has been good but there’s been a recent pullback of 31%, let’s check if the fundamentals match the share price.
Because Beauty Health made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. Shareholders of unprofitable companies usually expect strong revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
Beauty Health grew its revenue by 68% last year. That’s a head and shoulders above most loss-making companies. While the share price gain of 38% over twelve months is pretty tasty, you might argue it doesn’t fully reflect the strong revenue growth. If that’s the case, now might be the time to take a close look at Beauty Health. Human beings have trouble conceptualizing (and valuing) exponential growth. Is that what we’re seeing here?
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
Beauty Health is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. If you are thinking of buying or selling Beauty Health stock, you should check out this free report showing analyst consensus estimates for future profits.
A Different Perspective
Beauty Health boasts a total shareholder return of 38% for the last year. Unfortunately the share price is down 43% over the last quarter. Shorter term share price moves often don’t signify much about the business itself. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Take risks, for example – Beauty Health has 2 warning signs (and 1 which doesn’t sit too well with us) we think you should know about.
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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